Mining firms face difficulty raising funds

Singapore – Mining firms with projects in the Philippines looking to raise funds may have to rethink their plan as the government is still undertaking a review of the mining policy, bank officials said yesterday.

Greg Fournier, managing director and head of metals and mining for Asia Pacific at Merrill Lynch said at the sidelines of the 8th Asia Mining Congress being held here that mining firms with existing projects in the Philippines planning to raise funds from the market may have to push back their plan as the government has yet to release its new mining policy.

“I think it is going to be difficult to attract investors in the Philippines if there is uncertainty on what the rules are going to be. As an investor, it would be difficult to make a decision if you want to invest,” he said.

He said that any investor would want certainty in the regulatory environment before placing funds in a project.

For his part, Andrew Wong, managing director and head of investment banking division at the Bank of China International Asia Limited said mining firms with projects in the Philippines may find it difficult to raise funds now as the government is still conducting consultations with stakeholders for its new mining policy.

“I think investors are not going to be happy to put money there [in the Philippines] while there is uncertainty. They’re going to have a hard time to raise funds if they do it now,” he said.

He said investors would want to have clarity in rules to allow them to assess whether it would be worthwhile to make an investment for a particular project.

Roger Kennedy, managing director and head of energy and natural resources for Asia Pacific at J.P. Morgan shared the same view in the same event citing that any investor would want his or her money placed in a particular project to be secure.

“Any investor wants security in terms of title, tax regulations, legal regulatory systems. The better defined and the more concrete it (mining policy)is, the wider breadth of capital you can get into the country,” he said.

He said that while mining firms with projects in the Philippines are not advised to undertake fund-raising activities as the government is reviewing the mining policy, the release of a new policy is expected to help mining companies with projects in the country to prepare plans of work, as well as help investors in making their decision to place funds in projects.

“There are some great assets in the Philippines. The regulatory and legal system obviously have been and continue to be reviewed and updated and I think that is going to greatly help the appetite for foreign investors putting money in mining in the Philippines,” he said.

He said that a clear and transparent mining policy is critical in making mining a driver of growth in the Philippines as many companies are looking at it now given the abundance of metals such as copper and gold in the country.

Many parts of the country, he also said, have yet to be explored and so, many mining companies are looking at it for opportunities for business.

“I am very bullish in terms of geological aspects. The Philippines is still very open for mining opportunities,” he said.

The government is currently conducting consultations with stakeholders to get inputs on its proposed new mining policy.

The proposed mining policy of the government seeks to improve environmental standards, optimize government revenues, harmonize national and local policies and improve governance in the sector.

Part of the proposed mining policy is to increase the government’s revenues from mining by declaring mining areas as mineral reservations which will require mining firms to pay a five percent royalty on top all the other taxes already being paid.